I'm confused. Since I have been investing for retirement, I always was taught to hold bonds for safety and hold stocks for higher return. So I always did that. Now the last few months many have been saying that bonds and bond funds are not really safe any longer and should not be considered safe investments. This is something Dave Ramsey has been saying for years, but because I really don’t trust his investing advice it never really mattered to me. However, many people I respect like Buffett and Ellis have been saying pretty much the same thing.

Sooo this morning on the Ric Edelman show he reported that UBS is sending notifications out to their clients telling them that if they are invested in long term bonds and bond funds that their risk tolerance is now a 5 which is the same as if they were 100% in stocks.

Also, in February Warren Buffett’s advice to the average 50 year old is to put everything in a stock index funds and why bonds, gold and cash are really not safe investments.

So now what’s a 48 year old guy to do? I still have 15 or 20 years of investing ahead of me and want to have my money grow but not see it go down 50% in a down market.

You have legitimate concerns like the rest of us who use bonds to balance out our portfolios. You can ignore the noise and stay the course like the last poster said or you can choose to increase your Short Term Bond portion of your allocation to lessen the volatility of interest rate risk. This bond controversy is the most talked-about topic on these forums I think. I'm not sure if I am going to stay the course with Intermediate term bonds or convert 50% to short term.

For an opinion on the matter from someone I've come to believe is knowledgeable and an especially good resource for the DIY investor, look at the February 8, 2013 article on the http://www.longtermreturns.com website. Specifically, see the answers to reader questions 7 & 8. I think those responses might help you with your bond dilemma.

The first thing you need to do is define exactly what you mean by risk. It can mean lots of different things and there can be genuine misunderstanding AND there can be intentional manipulation by playing with language.

The second thing you need to do is to decide exactly what kind of "bonds" you are interested in. The people who are dissing bonds like to talk about the effect on a) the PRICE, on b) a LONG-TERM bond, if c) the interest rate were to suddenly rise INSTANTANEOUSLY. I personally, however, am concerned with the effect on a) the TOTAL VALUE, of b) an INTERMEDIATE-TERM BOND FUND, if c) the interest rate were to rise GRADUALLY.

Meanwhile, I believe that Vanguard's simple risk categorizations are quite reasonable and honest, so let's see what they have.

Total stock:

Long-term bond index:

Total bond index (intermediate-term)

And how did these funds behave in 2008-9?

Total Stock collapsed, Long-Term bond index stumbled, Total Bond sailed almost straight through. Furthermore, looking at the volatility generally, to my eyeball Total Stock has a lot, Long-Term Bond Index has a LOT LESS, and Total Bond has even less.

Yes, bonds have low return. Always have, but now it's worse. No, bonds do not have high risk. They still have low risk compared to stocks.

Austintatious wrote:For an opinion on the matter from someone I've come to believe is knowledgeable and an especially good resource for the DIY investor, look at the February 8, 2013 article on the http://www.longtermreturns.com website. Specifically, see the answers to reader questions 7 & 8. I think those responses might help you with your bond dilemma.

The explanation posted there should be embodied in a sticky on this forum and all further postings on bond bubbles and risk in bonds locked and referred to the sticky.

nisiprius wrote:No, bonds do not have high risk. They still have low risk compared to stocks.

And the reason for this is clear if investing fundamentals are applied.

In its purest sense, investing means exchanging current money for future expected cash flows. In the case of high quality bonds, you know what those cash flows are -- and they're not going anywhere; in the case of stocks, you don't know what those cash flows are -- and they could evaporate.

The current consternation is due to safe cash flows being in such high demand that people are willing to pay historically high prices for them (i.e. not discount them much, hence the current "low" interest rates). The current fear that with some mysterious power and gravity has gripped the marketplace is that people are paying too much and that prices will somehow and imminently collapse. Even if the high demand for these safe cash flows eased (and presumably there would be some reason for that) the cash flows themselves would still be there -- and though prices would decline, they wouldn't collapse in the same way as if people realized the cash flows were nonexistent (as happens with stocks).

nisiprius wrote:No, bonds do not have high risk. They still have low risk compared to stocks.

And the reason for this is clear if investing fundamentals are applied.

In its purest sense, investing means exchanging current money for future expected cash flows. In the case of high quality bonds, you know what those cash flows are -- and they're not going anywhere; in the case of stocks, you don't know what those cash flows are -- and they could evaporate.

IMO, this isn't quite right. For most folks, the only cash flows that matter are real (inflation adjusted) cash flows. Aside from TIPS and very short term instruments, the real value of a bond's future cash flows is NOT knowable at all. The ability of unexpected inflation to "evaporate" a bond's future cash flows is unlimited.

Folks in the 'bonds are for safety' camp would do well to remember the period from 1940-1980 when a portfolio of intermediate bonds slowly lost about 40% of its real value (mostly due to inflation). Bonds are a great portfolio diversifier and they do help dampen a portfolio's year-to-year volatility. However, bonds are not the safe investments that many folks here think they are.

nisiprius wrote:No, bonds do not have high risk. They still have low risk compared to stocks.

And the reason for this is clear if investing fundamentals are applied.

In its purest sense, investing means exchanging current money for future expected cash flows. In the case of high quality bonds, you know what those cash flows are -- and they're not going anywhere; in the case of stocks, you don't know what those cash flows are -- and they could evaporate.

IMO, this isn't quite right. For most folks, the only cash flows that matter are real (inflation adjusted) cash flows. Aside from TIPS and very short term instruments, the real value of a bond's future cash flows is NOT knowable at all. The ability of unexpected inflation to "evaporate" a bond's future cash flows is unlimited.

Folks in the 'bonds are for safety' camp would do well to remember the period from 1940-1980 when a portfolio of intermediate bonds slowly lost about 40% of its real value (mostly due to inflation). Bonds are a great portfolio diversifier and they do help dampen a portfolio's year-to-year volatility. However, bonds are not the safe investments that many folks here think they are.

Jim

No need to introduce complexity, I was merely pointing out the basic principles to illustrate fundamental risk differences between bond cash flows and stock cash flows.

Inflation-adjusted or not, safe bond cash flows are known and stock cash flows are unknown. There's no argument to be had there, and I've got little interest in participating in a speculative argument about future inflation rates. (Current prices include an inflation expectation -- if anyone wants to speculate beyond that, he is free to do so.)

OK, I'll confess: I'm in the "bonds for safety" group. Yes, I like the income component, but "safety" is my primary reason for investing in bond funds. So long as they can at least stay even with inflation, I can survive with that, although I would prefer some real gain. So, what is someone like me suppose to do with their fixed asset allocation?

ResNullius wrote:OK, I'll confess: I'm in the "bonds for safety" group. Yes, I like the income component, but "safety" is my primary reason for investing in bond funds. So long as they can at least stay even with inflation, I can survive with that, although I would prefer some real gain. So, what is someone like me suppose to do with their fixed asset allocation?

I'm in the same camp until I can get a satisfactory answer to the question above.

ResNullius wrote:OK, I'll confess: I'm in the "bonds for safety" group. Yes, I like the income component, but "safety" is my primary reason for investing in bond funds. So long as they can at least stay even with inflation, I can survive with that, although I would prefer some real gain. So, what is someone like me suppose to do with their fixed asset allocation?

The risk that most are talking about is based on the fact that interest rates are at historic lows and the most likely direction at some unknown point in the future is up. When that happens bond funds will decline by their duration for every percentage increase in rates. Here is how it might work. If rates currently around 2% go up to a more normal (historically) rate of 5%, then short term bonds with a duration of around 2 will loose 6% of their value; intermediate bond funds with a duration of 5-6 will loose 15-18%, and long term bond funds with durations of 15 -20 will loose 45 -60% of their value. So the way you reduce this kind of risk is keep your bond fund durations somewhat short, as by having a combination of short and intermediate funds. I don't think anyone seriously is advocating that bonds are so risky that you should not own them. Dave

The relationship between a bond's price and it's coupon is one of the most fundamental relationships of bond investing. This relationship has always been present ever since there were bonds in which to invest. This is the first thing that every bond investor learns about. It is common knowledge that a bond's price will fall as interest rates rise. This risk has always been present; it is not a surprise. The reason that people are saying to avoid bonds right now is because they believe they can predict the direction of interest rates. They think they can jump into cash, wait for rates to rise, and then jump back into bonds so that they don't have to take the loss. It's a kind of loss aversion. They think they can see it coming and they believe that they can get out of the way at precisely the correct time.

nimo956 wrote:The relationship between a bond's price and it's coupon is one of the most fundamental relationships of bond investing. This relationship has always been present ever since there were bonds in which to invest. This is the first thing that every bond investor learns about. It is common knowledge that a bond's price will fall as interest rates rise. This risk has always been present; it is not a surprise. The reason that people are saying to avoid bonds right now is because they believe they can predict the direction of interest rates. They think they can jump into cash, wait for rates to rise, and then jump back into bonds so that they don't have to take the loss. It's a kind of loss aversion. They think they can see it coming and they believe that they can get out of the way at precisely the correct time.

There are two kinds of people in the realm of predicting interest rates.

1.) Those that don't know the direction of interest rates.
2.) Those that don't know that they don't know the direction of interest rates.

I know that one of the things people on here say often is not to try to time the market....

But here I go anyway... I was looking at making a big bond buy in my Roth IRA. My outlook is very longterm (30+ years). But since EVERYONE is saying there's gonna be a bond bubble "burst" might it not make sense to wait until this inevitable bubble bursts before I buy, so that I can get more bang for my buck?

I'm not trying to time the market, I'm just banking on the sheep nature of crowds. If a bunch of people read that they need to sell bonds in WSJ, NYT, Forbes, etc they're GOING to do it, right? My mother was the one who first told me about it so if SHE has heard of it maybe it really will be a "thing."

So why not just wait a little bit and pick things up cheaper while everyone else is panicking?

saferthansome wrote:So why not just wait a little bit and pick things up cheaper while everyone else is panicking?

Tell me why I'm wrong, please!

Because "everyone" has been saying the bond bubble is about to burst for the past five years. In that time, the bond market (measured by Vanguard Total Bond) is up 30%. How much are you willing to wait?

stemikger wrote:I'm confused. Since I have been investing for retirement, I always was taught to hold bonds for safety and hold stocks for higher return. So I always did that. Now the last few months many have been saying that bonds and bond funds are not really safe any longer and should not be considered safe investments.
...

Treasury bonds that have a maturity that matches the investment horizon are considered to be risk free. You will get the interest payments and you will get the principle back at maturity, In any year, there might be a 1 in 10^6 chance that they will default, but that''s about as close to zero as you can get.

On the other hand, if the investment horizon is less than the maturity, bonds do have risk. The price and the annual return fluctuate. So if you want no risk in your bonds, just buy Treasuries that match your investment horizon. Then you know exactly what the outcome will be, at least in nominal terms.

But there is still inflation risk, and if inflation is higher than the expected, LT Treasuries can lose a lot of purchasing power.

But the real problem is that Treasuries that mature before 2029 have negative real yields. So, for example, that risk-free guaranteed real return for the 10-year TIPS is -0.592%. When the only thing guaranteed is loss of purchasing power, it is not so appealing.

Last edited by grayfox on Sun Feb 10, 2013 6:51 pm, edited 1 time in total.

nisiprius wrote:
Yes, bonds have low return. Always have, but now it's worse. No, bonds do not have high risk. They still have low risk compared to stocks.

Nisi,

2008 is not a good example for relating the risk of bonds going forward. In 2008, there was a "flight to quality" that benefited treasuries, especially those with longer maturity. A significant increase in interest rates will slam these same bonds - the exact opposite of what happened to them in 2008. I would say that in terms of value fluctuations, the risk in longer treasuries may be comparable to the risk in stocks.

nisiprius wrote:Yes, bonds have low return. Always have, but now it's worse. No, bonds do not have high risk. They still have low risk compared to stocks.

2008 is not a good example for relating the risk of bonds going forward. In 2008, there was a "flight to quality" that benefited treasuries, especially those with longer maturity. A significant increase in interest rates will slam these same bonds - the exact opposite of what happened to them in 2008. I would say that in terms of value fluctuations, the risk in longer treasuries may be comparable to the risk in stocks.

Well, that's part of the problem with the current noise.

Price volatility in long-term bonds

should not be of great concern to

Total return investors in intermediate-term bond funds.

Read the original posting. stemikger doesn't say exactly what his bond holdings are, but presumably it would be an intermediate-term "core" bond fund like Vanguard Total Bond. So he listens to some jerk on the radio and seems to think there's a chance that Total Bond "might go down 50% in a down market."

A contract that says you will be paid specific numbers of dollars on specific dates, as long as the payer has any money to pay any bills at all, is less risky than a payer asserting that they have every intention of richly rewarding you with chunks of its profit provided it has a good year. Bonds are less risky than stocks.

We've been over this ground before. Valuethinker has spelled out that "bonds" were well and truly slammed in 1994, yet Total Bond investors saw their brokerage numbers decline by less than 4% and recover fully within about 18 months. I won't say there was no bond massacre, but I will say that Total Bond owners didn't get massacred.

If all you care about is value fluctuations, that means you are planning to throw away the interest payments. Or that your time frame is so short that they hardly matter. And in this forum, we've seen people look at price charts like this and notice that the price per share of Total Bond hasn't gone anywhere--it's stayed close to $10 a share for its entire existence--and ask why anyone invests in bonds at all.

stemikger wrote:I'm confused. Since I have been investing for retirement, I always was taught to hold bonds for safety and hold stocks for higher return. So I always did that. Now the last few months many have been saying that bonds and bond funds are not really safe any longer and should not be considered safe investments. This is something Dave Ramsey has been saying for years, but because I really don’t trust his investing advice it never really mattered to me. However, many people I respect like Buffett and Ellis have been saying pretty much the same thing.

Sooo this morning on the Ric Edelman show he reported that UBS is sending notifications out to their clients telling them that if they are invested in long term bonds and bond funds that their risk tolerance is now a 5 which is the same as if they were 100% in stocks.

Also, in February Warren Buffett’s advice to the average 50 year old is to put everything in a stock index funds and why bonds, gold and cash are really not safe investments.

So now what’s a 48 year old guy to do? I still have 15 or 20 years of investing ahead of me and want to have my money grow but not see it go down 50% in a down market.

The reason some talk about bonds being "risky" is because their goal is to generate a real compound rate of return on their portfolio over time. So they define risk as "failure to accomplish that objective", and too much or all of a portfolio in assets that put that goal in jeapordy are indeed considered risky, which is the case with bonds, as this 50+'year period teaches us:

grayfox wrote:[
But there is still inflation risk, and if inflation is higher than the expected, LT Treasuries can lose a lot of purchasing power.

But the real problem is that Treasuries that mature before 2029 have negative real yields. So, for example, that risk-free guaranteed real return for the 10-year TIPS is -0.592%. When the only thing guaranteed is loss of purchasing power, it is not so appealing.

The problem with bonds might not be that interest rates rise but that they stay low! There's another active thread which links to a Credit Suisse report; in that report, they make the prediction that bond rates will stay below the rate of inflation for the next 6-8 years!! Those nice even lines for bonds in nisiprius' charts look really attractive until you adjust for inflation and see those lines tilting downward.

It's abundantly clear that interest rates are on the cusp of rising, and maybe even significantly - in about 2, maybe 3 years. It's just as clear that inflation is on the verge of inflating, and maybe even significantly - in about 2, maybe 3 years. And most clearly of all, the S&P will top off 2013 at 1567,guaranteed. So, what's to worry?

Austintatious wrote:It's abundantly clear that interest rates are on the cusp of rising, and maybe even significantly - in about 2, maybe 3 years. It's just as clear that inflation is on the verge of inflating, and maybe even significantly - in about 2, maybe 3 years. And most clearly of all, the S&P will top off 2013 at 1567,guaranteed. So, what's to worry?

Yes all of the above is true, and I'm the next winner of the Powerball lottery too!
I see your crystal ball is as clear as Warren Buffett. The only thing clear is the world is turning, it's not jumping out the window or frightened to move forward because bonds did this yesterday and is expected to do something else tomorrow.

Stemikger should turn off the tube, turn off talk radio and stop talking investments with his colleagues, brother in law and shoe shine boy. Instead, he should research the price action on Total Bond Index for the last 2 years, just about the time the pundits came out in force to warn of the collapsing bond market, skyrocketing inflation - it's readily available on the Vanguard website. Since then, the domestic equities market is up more than 20%, bonds did not collapse and instead have provided positive total returns in each of the last two years. After researching it, he should revisit what the pundits have been saying and realize this "Nobody knows nothing". Stop comparing Warren Buffett to Stemikger, Warren has a totally different investment horizon than the OP, what Warren says has little relevance to you, Warren is thinking about his foundation and Warren is not making specific recommendations to anyone other than to invest in index funds. Don't take advice from Dave Ramsey, the same guy who claims to have made 12% per annum investing in growth mutual funds, hogwash! If you have a budgeting question go ahead, ask Dave, if you have an investment question - post it here, but please stop quoting Dave Ramsey - he's known for debt repayment snowballs, not how markets, equities or debt instruments work.

Stemikger should turn off the tube, turn off talk radio and stop talking investments with his colleagues, brother in law and shoe shine boy. Instead, he should research the price action on Total Bond Index for the last 2 years, just about the time the pundits came out in force to warn of the collapsing bond market, skyrocketing inflation - it's readily available on the Vanguard website. Since then, the domestic equities market is up more than 20%, bonds did not collapse and instead have provided positive total returns in each of the last two years. After researching it, he should revisit what the pundits have been saying and realize this "Nobody knows nothing".

Bingo, and well said! Of course, your advice applies to all of us. Stemikger is no different than the majority of us, simply trying to get it right or reasonably close. But it's hard to tune out "the noise", mostly because, despite what we profess, we really don't want or really try to tune it out. We're addicted to it or, at least, entertained by it, even as we make fun of it and those serving it up. It's a meaningful part of our lives, at least as important to us (admit it or not) as is enjoying our morning coffee and newspaper. The key, IMO, is to learn how to keep our emotions and responses to all the noise under control. The older hands on the forum seem to have have gotten there. Stemikger and me and many, if not most, other Bogleheads are still working on it. And it ain't easy.

nisiprius wrote:No, bonds do not have high risk. They still have low risk compared to stocks.

And the reason for this is clear if investing fundamentals are applied.

In its purest sense, investing means exchanging current money for future expected cash flows. In the case of high quality bonds, you know what those cash flows are -- and they're not going anywhere; in the case of stocks, you don't know what those cash flows are -- and they could evaporate.

IMO, this isn't quite right. For most folks, the only cash flows that matter are real (inflation adjusted) cash flows. Aside from TIPS and very short term instruments, the real value of a bond's future cash flows is NOT knowable at all. The ability of unexpected inflation to "evaporate" a bond's future cash flows is unlimited.

Folks in the 'bonds are for safety' camp would do well to remember the period from 1940-1980 when a portfolio of intermediate bonds slowly lost about 40% of its real value (mostly due to inflation). Bonds are a great portfolio diversifier and they do help dampen a portfolio's year-to-year volatility. However, bonds are not the safe investments that many folks here think they are.
Jim

I pay my mortgage in nominal dollars. I pay other contracts in nominal dollars. Many of my expenses are locked in for years in nominal dollars.

"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep

Austintatious wrote: But it's hard to tune out "the noise", mostly because, despite what we profess, we really don't want or really try to tune it out. We're addicted to it or, at least, entertained by it, even as we make fun of it and those serving it up. It's a meaningful part of our lives, at least as important to us (admit it or not) as is enjoying our morning coffee and newspaper. The key, IMO, is to learn how to keep our emotions and responses to all the noise under control. The older hands on the forum seem to have have gotten there. Stemikger and me and many, if not most, other Bogleheads are still working on it. And it ain't easy.

There is a lot of 'noise' on this forum as well...(There is a lot of noise on this very thread!).....You need to know how to filter that as well.

magellan wrote:IMO, this isn't quite right. For most folks, the only cash flows that matter are real (inflation adjusted) cash flows. Aside from TIPS and very short term instruments, the real value of a bond's future cash flows is NOT knowable at all.

I pay my mortgage in nominal dollars. I pay other contracts in nominal dollars. Many of my expenses are locked in for years in nominal dollars.

Well, I did say most folks. Also, the expenses that are relevant here are the expenses you'll have when you start spending down your portfolio. Most people don't have a mortgage when they retire (although that's a whole other debate we hash through here from time to time)

Investing, especially for retirement, is about "pushing" current wealth into the future to fund future expenses. If those expenses are nominal, it's fine to consider investments in terms of nominal returns. OTOH, if those future expenses are subject to inflation risk, it's ONLY appropriate to consider investments in terms of real return.

Stemikger should turn off the tube, turn off talk radio and stop talking investments with his colleagues, brother in law and shoe shine boy. Instead, he should research the price action on Total Bond Index for the last 2 years, just about the time the pundits came out in force to warn of the collapsing bond market, skyrocketing inflation - it's readily available on the Vanguard website. Since then, the domestic equities market is up more than 20%, bonds did not collapse and instead have provided positive total returns in each of the last two years. After researching it, he should revisit what the pundits have been saying and realize this "Nobody knows nothing".

Bingo, and well said! Of course, your advice applies to all of us. Stemikger is no different than the majority of us, simply trying to get it right or reasonably close. But it's hard to tune out "the noise", mostly because, despite what we profess, we really don't want or really try to tune it out. We're addicted to it or, at least, entertained by it, even as we make fun of it and those serving it up. It's a meaningful part of our lives, at least as important to us (admit it or not) as is enjoying our morning coffee and newspaper. The key, IMO, is to learn how to keep our emotions and responses to all the noise under control. The older hands on the forum seem to have have gotten there. Stemikger and me and many, if not most, other Bogleheads are still working on it. And it ain't easy.

I agree, but not only is tuning out the noise hard, but not to put myself down, I just don't understand bonds, so when I hear someone on the radio say what Ric Edelman said yesterday and throws in the name UBS I figure there is something to it. As much as I love the basics of investing, I just was never able to grasp anything beyond that. Also, I'm not a newbie at this, but I just know my limitations on what I understand. As Mr. Buffett as often said, know your circle of competence.

So when there is something I need to know I come here because I do realize there are many smart and technical people here and that maybe by osmosis I can pick up some of the more technical stuff.

However, I found the replies on this thread very helpful. Thanks. It seems like since I paid off my mortgage recently my wheels have been turning harder than ever. Not sure what that is about. LOL.

Austintatious wrote:For an opinion on the matter from someone I've come to believe is knowledgeable and an especially good resource for the DIY investor, look at the February 8, 2013 article on the http://www.longtermreturns.com website. Specifically, see the answers to reader questions 7 & 8. I think those responses might help you with your bond dilemma.

The explanation posted there should be embodied in a sticky on this forum and all further postings on bond bubbles and risk in bonds locked and referred to the sticky.

Who is the author of that blog ? They have to be a Boglehead.

BTW, make sure you click "Read the full article →" towards the bottom of the answer.

Austintatious wrote:For an opinion on the matter from someone I've come to believe is knowledgeable and an especially good resource for the DIY investor, look at the February 8, 2013 article on the http://www.longtermreturns.com website. Specifically, see the answers to reader questions 7 & 8. I think those responses might help you with your bond dilemma.

The explanation posted there should be embodied in a sticky on this forum and all further postings on bond bubbles and risk in bonds locked and referred to the sticky.

Be advised that the mystery blogger also pointed to this little morsel:
In 40 years from 1941 to 1981 bonds on average lost 2% per year after inflation (and before taxes).
But look at stocks. Good example why examining asset classes in isolation can be misleading.

I heard most of the Edelman broadcast about this issue. He and his partner could have made this a lot clearer. They rambled around for a long time which no doubt confused a lot of people. It was specific to long term bonds which are much more risky than short or intermediate bonds. I never heard them mention duration of bonds or explain the impact of rising interest rates. For example, the Vanguard LT Bond Index has duration of 14.8 which means a 1% rise in long term rates would result in a 14.8% loss of asset value as compared to Vanguard Intermediate Bond Index which has a duration of 6.5 which would have 6.5% loss of asset value. The loss will be offset over time by higher return from increased interest rate.

Austintatious wrote:For an opinion on the matter from someone I've come to believe is knowledgeable and an especially good resource for the DIY investor, look at the February 8, 2013 article on the http://www.longtermreturns.com website. Specifically, see the answers to reader questions 7 & 8. I think those responses might help you with your bond dilemma.

The explanation posted there should be embodied in a sticky on this forum and all further postings on bond bubbles and risk in bonds locked and referred to the sticky.

Who is the author of that blog ? They have to be a Boglehead.

BTW, make sure you click "Read the full article →" towards the bottom of the answer.

Well, the author of "that blog" is at it again. Stemikger, Bustoff and others who are interested, check out today's post, for more discussion of the the so called bond bubble. Who is that masked man?